FINC 3610 Exam 4 Dismukes Questions with Correct
Answers | Updated (100% Correct Answers)
Risk-Return Tradeoff Answer: The idea that higher risk means higher potential
return but also higher potential loss
Dollar Return (Stock) Answer: Dividends received + Capital gain/loss (ending
price - beginning price)
Percentage Return (Stock) Answer: Dollar return ÷ Initial investment
Dollar Return (Bond) Answer: Interest received + Capital gain/loss
Percentage Return (Bond) Answer: Dollar return ÷ Initial bond price
Risk Premium Answer: Expected return - Risk-free return; compensation for
taking on risk
Large-Cap Stock Answer: Stock of large companies; grows steadily over time
Small-Cap Stock Answer: Stock of small companies; more volatility, higher long-
term growth
5 Major Stock Crashes Answer: 1929 Stock Market Crash; Black Monday (1987);
Dot-com Bubble (1999-2000); Financial Crisis (2008); COVID-19 Crash (2020)
Systematic Risk (Nondiversifiable Risk) Answer: Market-wide risk that affects all
companies; cannot be eliminated by diversification
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